“It is not difficult to get into the housing market at the moment,” says a knighted bank boss

The boss of one of the 'big four' banks has come under fire after saying it is 'not that difficult at the moment' to get on the property ladder.

NatWest chairman Sir Howard Davies was speaking on BBC 4's Today radio program after presenter Amol Rajan asked him about the UK housing market.

Mr Rajan asked: 'When do you think it will be easier for people to get on the property ladder in this country?'

Sir Howard replied: 'Well, I don't think it's that difficult at the moment.'

The bank boss's response has been questioned by property market experts who suggested it did not reflect the circumstances of '99 per cent of the population'.

Sir Howard's response also provoked a shocking response from the show's host.

Mr Rajan said: “If we want to buy a house in this country, do we live in the same country or do you report from abroad?”

The bank boss said in a response that home buyers should save their money to buy a home.

“You have to save and it's always been that way,” he said.

However, Mr Rajan went on to highlight the average income needed to pay for a house – which in some areas can be as much as nine times that to buy an average property.

The average house in London now costs twelve times the average London wage.

Banks typically lend up to 4.5 income multiples, meaning it is difficult for many first-time buyers in these areas to get onto the property ladder without financial help.

Mr Rajan explained: 'I think of our listeners under 40 who would say, 'Have you tried to buy a house in a big city in this country?'.

And Sir Howard said: 'Yes, undoubtedly, but what we saw during the financial crisis was the risk that people could borrow 100 per cent to get on the property ladder – and then suffer a serious fall in their share values. their homes and have to leave, and have bad credit etc.

'So there were dangers associated with the very, very easy access to mortgage credit, so I fully recognize that there are people who find it very difficult to get the process started.

“They will have to save more, but I think that is inherent in the change in the financial system as a result of the mistakes made during the last financial crisis and we have to accept that we are still living with that.”

Sir Howard is a British historian and author, chairman of the NatWest Group and former director of the London School of Economics. He was the first chairman of the Financial Services Authority.

Experts suggested the bank boss may be out of touch with the rest of the country.

Jonathan Burridge, of mortgage broker We Are Money, said: 'A note to their PR director: it is probably not wise for a knighted director of a giant bank with a multi-million pound salary package to comment on the financial problems facing the de remaining 99 percent of the population, especially those who have been experiencing rampant property price inflation and spiraling inflation for more than a decade.”

Meanwhile, Mark Harris of mortgage broker SPF Private Clients said: 'The market is polarized between the 'haves' and 'have nots'.

'Those with higher incomes and/or higher deposits and/or access to people willing and able to support them will find it easy to get onto the property ladder if they find something they want to buy.

'Those who are in a less fortunate position – i.e. lower incomes/less disposable income or renters who cannot save for a deposit and do not receive financial support from family – will have a harder time. But is that different from ten years ago?

“Lenders are cash-rich and want to lend money to the right borrower.

'While property prices are higher and wages have not risen in line, rents are higher and the general cost of living has risen, but the 'haves' have likely benefited from house price inflation from parents who have been able to donate savings and increase their income use it to help.'

North London estate agent Jeremy Leaf said: 'Lenders have become smarter and built in buffers to protect borrowers, which is the main reason why repossessions are low and has kept the market from correcting or collapsing.

'We notice in practice that starters enter with much more open eyes than before and are afraid that they are overloading themselves.

'That said, first-time buyers are keen to continue buying if they can afford it, mainly due to high rents and the fact that they don't want to keep paying the landlord's mortgage instead of their own.'

Sir Howard's comments come as house prices have exceeded expectations, rising 1.7 per cent in 2023, according to the latest Halifax figures.

The mortgage lender said average prices rose for the third consecutive month in a row, with a 1.1 percent increase in December alone.

A typical British home now costs £287,105, which is £4,800 higher than in December 2022, but still £7,000 below the peak recorded in summer 2022.

After the Today programme, Sir Howard went on to clarify his comments, saying: 'Given recent interest rate moves by lenders there are some early green shoots in mortgage prices and while financing remains strong, my comment was intended to reflect that in this context access to Mortgages are less difficult than before.

'I fully appreciate that this may not have come across that way to listeners and as I said on the programme, I do recognize how difficult it is for people buying a home and it was not my intention to highlight the serious challenges they face. to downplay.

'People have to save much more than before and that is difficult for starters. The role of banks in the current environment is to lend responsibly and support customers in building a savings habit and transitioning to homeownership.”